Why might an insurer offer a premium discount?

A premium discount can be offered by an insurer to attract policyholders with specific health habits because this strategy incentivizes individuals who engage in healthier behaviors, such as exercising regularly, maintaining a balanced diet, or not smoking. By offering lower premiums to these individuals, insurers are able to encourage practices that may lead to fewer health claims down the line. This not only benefits the insured by reducing their costs but also advantages the insurer by promoting lower risk among the policyholder pool, effectively reducing the likelihood and cost of claims they need to cover.

While other reasons to offer discounts do exist in the insurance landscape, they do not align with the concept of directly attracting and incentivizing healthy behaviors among individuals.